Homeowners could see a sharp drop in the value of their houses because of Brexit paired with the wage drop, a London School of Economics professor predicts.

Prices could fall almost 40 per cent and even put homeowners at risk of negative equity, meaning their home could be worth less than their mortgage, The Mirror reported.

Professor Paul Cheshire, Professor of Economic Geography at LSE, said the property market could take a sharp downturn similar to the crash in the 1990s.

He said house price can be affected when earnings drag behind inflation. Last month, inflation hit 2.9 per cent, while incomes grew by 2.1 per cent.

House prices could fall by almost 40 per cent, according to a Professor of Economic Geography at the London School of Economics

"We are due a significant correction in house prices," Professor Cheshire told the Mail on Sunday. "I think we are beginning to see signs that correction may be starting.

"Historically, trends seem always to start in London and then move out across the rest of the country. In the capital, you are already seeing house prices rising less rapidly than in other parts of Britain."

His warning comes not long after a report by the National Association of Estate Agents found that the number of homes sold in May for below the asking price climbed to 77 per cent.